VES-13-18-CO:R:IT:C 112553 DEC
Deputy Regional Director
Commercial Operations
Pacific Region
One World Trade Center
Long Beach, California 90731
RE: Vessel Repair; inspection; installation; modification;
Vessel: ARCO SAG RIVER V-513
Vessel Repair Entry No. C27-0067893-4
Date of Arrival: September 19, 1992
Port of Arrival: Long Beach, California
Dear Sir:
This is in response to your memorandum dated December 18,
1992, which forwards for our consideration an application for
relief from duties assessed pursuant to 19 U.S.C. 1466 filed in
connection with the ARCO SAG RIVER V-513, vessel repair entry
number C27-0067893-4. Our findings are set forth below.
FACTS:
The ARCO SAG RIVER is an American-flag vessel owned by ARCO
Marine, Inc. The vessel had foreign shipyard work performed
during the period of July 19, 1992 - August 29, 1992.
Subsequently, the vessel arrived in the United States at Long
Beach, California on September 19, 1992, and a vessel repair
entry was filed on the same day.
An application for relief dated November 18, 1992, was
timely filed seeking remission from vessel repair duties. The
items submitted to this office for review are set out below.
Invoice No. Description
105 inspection (preparation)
111 installation chloropac piping
321 installation strainer
321-1 installation strainer
416 relocate manifold
-2-
418 bunker line main deck
426 king post bracket
505 relocation flood light
510 pump room strobe light
804 ladder and platform
906-2 midship cargo headers installed
907-3 installation stripper suctions
907-4 air test connection
907-5 stripper S.W. suction
907-10 pumproom piping
912-5 vapor recovery manifold
912-6 vapor recovery manifold
Sperry Marine gyro material installed
Sperry Marine gyro labor
Sperry Marine gyro expense
Sanki ultrasonic survey
ISSUE:
Whether the cost of foreign shipyard work completed aboard
the subject vessel is dutiable pursuant to 19 U.S.C. 1466.
LAW AND ANALYSIS:
Title 19, United States Code, section 1466 provides, in
pertinent part, for payment of duty in the amount of 50 percent
ad valorem on the cost of foreign repairs to vessels documented
under the laws of the United States to engage in the foreign or
coastwise trade.
The treatment of the respective invoices submitted for
review are set out in detail below.
Invoice 105 (inspection (preparation))
Cleaning operations in preparation of painting are dutiable
provided that the work is completed prior to termination of the
voyage. C.I.E. 820/60 (June 6, 1960). In this case, the coating
was completed in the foreign shipyard and is separately itemized
on the invoice. Consequently, the preparation costs ($5229) as
well as the coating costs ($428) are dutiable.
Additionally, pursuant to C.I.E. 233/60 (March 11, 1960),
the costs associated with cleaning and painting new marks on the
chains are dutiable. Specifically, the range, clean, prepare
anchors and chains ($1042), hardening of shackles and pugs
($642), and blast, coat, and mark ($888) items are dutiable.
-3-
Modifications
Invoice 111 (installation chloropac piping)
Invoice 321 (installation strainer)
Invoice 321-1 (installation strainer)
Invoice 416 (relocate manifold)
Invoice 418 (bunker line main deck)
Invoice 426 (king post bracket)
Invoice 505 (relocation flood light)
Invoice 510 (pump room strobe light)
Invoice 804 (ladder and platform)
Invoice 906-2 (midship cargo headers installed)
Invoice 907-4 (air test connection)
Invoice 907-5 (stripper S.W. suction)
Invoice 907-10 (pumproom piping)
Invoice 912-5 (vapor recovery manifold)
Invoice 912-6 (vapor recovery manifold)
In United States v. Admiral Oriental Lines et al., 18
C.C.P.A. 137 (T.D. 44359 (1930)), the court distinguished
equipment and repairs (dutiable) from permanent additions to the
hull and fittings (non-dutiable). For purposes of section 1466,
Customs has adopted the definition of dutiable equipment as:
. . . portable articles necessary or appropriate
for the navigation, operation, or maintenance of
a vessel, but not permanently incorporated in or
permanently attached to its hull or propelling
machinery, and not constituting consumable supplies.
T.D. 34150 (1914).
For equipment to become part of the hull and fittings of a
vessel, it must
. . .become a permanent part of the hull, the
installation of which caused the superstructure
of the vessel to be changed, or where there is
proof that at the time the change was made it
was the intention of the owners that such
alteration or addition become a permanent part
of the vessel. In either case the permanency
of such equipment should be, and in most cases is,
evidenced by changes in conformity therewith in
the official blue prints of the vessel.
T.D. 43585 (1929).
-4-
Before an item is to be construed as a part of the vessel,
it must be (1) a permanent attachment and (2) essential to the
successful operation of the vessel. Otte v. United States, 7
C.C.P.A. 166, 169 (1916).
Consequently, these items meet the above-stated criteria and
are deemed to be modifications or expenses associated with
modifications and are, accordingly, to be entered free of duty.
Invoice 907-3 (installation stripper suctions)
The submitted invoice associated with this item does not
provide sufficient information to make a determination of
dutiability. Absent a breakdown of what "other work"
encompasses, the amount associated with this item ($1838) is
dutiable.
Sperry Marine
The invoice associated with this item states that two gyro
compasses were installed and one was removed. The applicant
stated that the equipment installed was of U.S. origin and was
installed using U.S. labor. Consequently, this item is not
dutiable. 19 U.S.C. 1466(d)(2)(1992).
Sanki International (ultrasonic survey)
This item represents the expense incurred for ultrasonic
gauging on the ARCO SAG RIVER. Since this survey was
unaccompanied by any repairs, it is not dutiable. C.D. 1310
(March 13, 1951) and C.D. 1830 (December 6, 1956).
HOLDING:
After thorough review of the evidence presented, and as
detailed in the Law and Analysis portion of this ruling, the
application for relief is granted in part and denied in part.
Sincerely,
Acting Chief
Carrier Rulings Branch